Rise of the cost of land at auction

Ok.. maybe I'm crazy. But ya see, I read the Feb 8th headline, touting the ability to make a RL income in a digital world. Why did headlines stop on Feb 8th, by the way? anyway, supplement my programming career, maybe work half as many assignments. Sure give it a shot.

But today.. .whoa! Sims with beaches going for over $2000US! How crazy is this? With all the land for sale already? What are the landbarons, (one crazed control freak in particular) thinking?

Does anyone know why the dramatic increase? Please tell me its not do to the increase in signups, since this is most likely due to that Feb 8th headline.

A good answer would be appreciated. But conjecture also welcome.

It is not crazy but a strategy that has been tried and tested in RL often enough. Sometimes with success, sometimes not. It goes as follows: secure posession or at least control over a sizeable chunk of some rare commodity and then ramp up the prices. Other players in the market will follow - it does look like a good idea at first. Rising prices bring in more players in who are speculating on even higher prices. It's called a "bubble market". A while later, the bubble bursts, of course. It always does. If you make a profit depends largely on the timing or your deals.

As land in general is not scarce in SL, but demand for waterfront usually exceeds supply, this strategy is focused on the waterfront market. Here one player can try to control much of the market without having to invest too much.

I doubt if this has got anything to do with said headline. The number of residents is not growing faster these days than in the last year.

95% of these sims are chopped up and resold in smaller parcels. They are not being gobbled up. If you hold the larger share of the sim for more than 30 days, now you have a 2nd month of tier to add to the cost. One speculator bought up some beach front north of the sim I own, and jacked up the prices. I believe this is being done on a short-term basis to depress interest in said parcels, to gain interest in other properties....say... islands?

For the other speculators, basically you eak out a small gain. This isn't all that lucrative at these prices.

The lunatic who is buying up all the prime land has alternative motives Dana. And is causing the other speculators to bid higher, possibly making them think there is some good reason for the heavy bidding. Last week I bought a beautiful sim of beach for 25% less than today's prices. None of the sims today were better.

Now in 3 or 4 weeks, if all the land purchased at auction today has been parceled and resold, then color me wrong.

This move is on the waterfront market alone. Most the sims auctioned will be sold at "normal" prices. Just the waterfront parcels are marked up at 15L$ to 20L$ per sqm.

This is no short term gamble and does not have to be. If I buy waterfront property at below 10L$ - like it was done buy the group in question last week - and mark it up to 20L$, I can hold it for a very long time and still make a profit. This all depends on finally getting a sale through of course. But if I can make sure, that there is no other "source" the chances for a sale are not that bad.

As has been stated elsewhere on this forums (/130/f2/91340/1.html and /130/b5/91476/1.html): tier is a little less than 1 L$ per sqm and month if you have large holdings. If you have a margin of 6L$ per sqm on the land, you can wait half a year and still make a profit.I don't rule out "another agenda". There can be many reasons for the heavy bidding, though. It all depends on if this scheme works out.

If it does, you can achive large profits with it. Not bidding means (1) you miss a nice profit and (2) make your competitor stronger who reeks in those profits.

If it does not ...

Some oftopic - some related to the thread... or a new discussion?

I should have bought that waterfront I was looking at.. offered...... but as now I will be a baglady in SL for years)))

BUT as IRL.. brokers/Mäklare/Similar in SL should think about this.. - the person behind the company and the reputation at the market will make me more secure when i am looking for that special piece of land.. and dare to shop... Personal support.. meetings..

And next - what will happen that day I want to resell my land.. what support will I get then.. if any?..

IF sim prices rise. Will land price at the resel market be higher... or will as when I sold my small land in Ansheland loose a lot of money.. and more to if i had taken the sell back to the landlord price... (offer was 50% of initial cost)

When IF I sell my appartment IRL I wil get a higher price.. it was the opposite in SL...

Tina - The BagLady of SL... (Not true I live with my GF - I do the cleaning!)

Dana, is the max size of this connected Grid limited by available computing power?

It occured to me that if each connected Sim requires one server to run it, the eventual size of the Grid is only limited by available RL space to locate them but......

Is the coding that is required to link them increasing by the square of the connected sims per each additional sim?

IF that IS true in whole (or even part) there WOULD be a limit to the size of the Grid at any one time, which in turn would support the concept of limited water land.

BTW close to one of my Island water properties there is a fairly large (16,000 ish) square meter block available that is currently costed at close to $1,000 dollars (the real ones). That is serious money by SL standards and is perhaps nearly 3 times what was generally available last December. And people are buying at those prices.

Yes and no.

In theory each SIM is a separate processing unit and the interactions with the other sims are limited to border crossing, so each SIM has to cope at worst with the 8 (?) surrounding
regions and it is not concerned with the total number of SIMs in the "universe".

In practice, some services are centralized (IMs, Teleports, Avatar inventories, I think...) so there is a practical limit to the current architecture before severe service shortages cripple the system.

In practice things are much more complex... a few points to consider:

Some of the limits of the current technical infrastructure are stressed by the number of active users more than land "representation".

Accurately predicting architectural bottlenecks is not easy, even for people who know the code intimately... I would not bet RL money on such a speculation, maybe the real scaling limit will be number of notecards in the inventory, or clothing textures, or IMs, or number of avatars in the same SIM... all things completely disconnected from the type of terrain you live in... worse even, sometimes has already lamented that a succesfull club may limit access to your own home (by saturating sim resources before you can log or teleport in). This would make any kind of land less valuable... who would like to spend premium money for something you can't access at peak hours?

Is waterfront intrinsically more valuable (e.g.: you have 50% less chances to have to cope with annoying neighbours or "Impeach whoever" signs), regardless of expected technical shortages?
I suspect this to be the case, while I have problems figuring out any technical problem that could impact "mainland" more than waterfront. Maybe someone else can offer a hypotesis about this.

The possibility that Linden could not add any new SIM due to technical problems will obviously impact land prices, but I don't see while this would be restricted to waterfront alone... in other words, if the current investor(s) have reason to suspect that land will become scarce in the near future due to some specific insight they would better spend their money buying any kind of land at bargain prices, instead of artificially inflate only waterfront lots.

Dana:

Lets say your initial cost is $2000 on a desired sim at auction. And the current exchange rate is 280L / $1. So, your upfront cost to Linden is 560,000 L$. You will also more than likely be raising your tier at least for this month. So that is $195 x 280 = 54,600 for a total cost of 614,600 $L. So now you parcel up the land, and sell it for a 6L$ margin. This is dependent on the parcels tho. You might have 4 good beaches, the rest are off water. But since we are averaging, you will have to sell the off water parcels as well. Unless you mark up the waterfront to cover your entire cost. Each month that you dont sell, knock off 1L$ of profit. So lets say, on average you sell in 3 months, for an average of 3L$ profit per sqm. You've made 180,000 / 280 = $642 US. But here is something else to consider. The Linden drops to 300 during that 3 months. So knock off another 10%, now were under $600.

Question is, when the mainland was being populated, were prices this high? That is what concerns me. Newbies will struggle against a falling Linden, and a learning curve, and higher prices for land. So lets make it 4 months, , now your down another 25%.
I dont believe anyone will pay 10L$ margin on the auction cost, just for 'status'. So this land is going to sit.

And of course if the gambling commission decides they want their cut on the gambling in SL, now your out your entire investment.

Thanks for your input.

I find land being sold in world is also overly expensive. I've seen so many so-so plots at 10L permeter. Nothing really fantastic about them at all. In fact many of them were dead boring. Finally settled on a plot in the color sims that went for 5.7L a meter and frankly, I liked it alot better than the new land I saw for sale.